Just like individuals, companies go through different moments of life during their growth and development. Is it entering a new market, hiring, launching a new product, etc.
These moments of life imply new investments form entrepreneurs and seeking out financial support may be necessary. October provides specific advantages for SMEs who are looking for an efficient, transparent and customer-friendly alternative to the traditional banking system.
What is the profile of the October borrower?
SMEs that borrow on October are consolidated businesses with a median track record of 14 years and 17 employees. Financially speaking, they are fulfilled companies with median turnover and EBITDA of € 3,2M and € 402K respectively. They already have credit lines with their financial entities.
Why do SMEs borrow on October?
SMEs choose October mostly because:
- They want to receive the funds quickly: on October, companies can test their eligibility to a loan directly online and can receive their funds in approximately a week.
- They need to diversify their sources of financing: the SMEs that borrow on October already have credit lines with their banks but they may be looking for alternative financings because the bank has reached out its maximum risk exposure or because they want to decrease their level of dependency on their traditional financial entities.
- They do not give personal guarantees: even if we can ask for some kind of guarantee depending of the project of the borrower, we usually do not ask for one. Instead of pledging assets, borrowers qualify based on their credit / cash history and income.
- They get financing without collateral obligations: when a company borrows on October, they only get a loan, they do not have to contract tied products.
- They do not want to be subject to any covenants: contrary to most of financial entities, which often add a clause in the loan contract to require a borrower to perform or to refrain specific actions, we believe the activity of the company should not be conditioned.
At what moment of their lives do SMEs come to October?
The 9 most common moments of life that SMEs come to October for are:
- Digitization is a moment when a SME implements new digital tools to increase its productivity and modernize its practices.
- Internationalization enables SMEs to grow its business by expanding into new markets. This can be done by developing the commercial operations abroad or developing a new production unit for a specific country.
- Refinancing can help SMEs recapitalize by replacing an existing loan with a new one. This can enable lower monthly payments and lower interest rates.
- Through commercialization, SMEs can attract new clients by launching new marketing campaigns. A successful campaign can bring its brand, products or services to the attention to potential customers and contribute to the growth of your company.
- Transformation is key for SME working in the catering, tourism or retail sectors. They can transform the experience of their clients by renovating their hotel, restaurant or shop for example.
- Recruitment is used to grow the company’s workforce and production capacity. Expanding the team is an essential step for SMEs to achieve their business goals.
- Optimizing the production of a company with process improvements and new machinery can boost productivity and increase profit margins.
- A business acquisition can enable SMEs to grow their business in a quicker and more profitable manner than normal. The process of acquiring a company is usually used to increase market share through access to an existing network, reach new markets, achieve synergies or economies of scale.
- Sustainability is becoming a more and more important factor for companies nowadays. Companies are actively trying to improve their ecological footprint by investing in sustainable projects. It is important though that these new projects are economically viable, socially responsible and environmentally friendly.